Systemax to close brick-and-mortar retail business, focus on e-commerce sales

After a bribery scandal and months of dwindling retail revenue, Port Washington-based Systemax Inc. said Wednesday that it plans to exit its brick-and-mortar electronics business and focus exclusively on selling online and directly to businesses.

The move, announced along with the company's fourth-quarter earnings, will include closing a distribution center and 31 of its 34 stores. The company will also lay off an unspecified number of workers.

"We've made the decision to primarily serve the consumer markets around [the] e-commerce platform and exit substantially all of our brick-and-mortar consumer retail stores," Systemax chairman and chief executive Richard Leeds said during a call with analysts. The company had no stores in New York at the end of 2013, according to a regulatory filing.

Systemax reported $912.9 million in sales during the three months that ended in December, up 4.4 percent from the same period a year ago.

But retail sales of computers and other electronics, which account for roughly a quarter of the company's overall revenue, fell 1.6 percent, to $260.4 million. Sales directly to businesses rose 7 percent, to $652.5 million.

Meanwhile, rising expenses and a $10 million asset impairment charge led Systemax to report a $25.5 million loss for the quarter. The company, which also sells industrial products, employs about 5,100 people globally, including roughly 300 on Long Island.

The decision to largely shutter its consumer business comes a week after two brothers who once ran Systemax's retail operation in Miami were sentenced on bribery charges.

Carl Fiorentino, 57, who admitted to taking $9.5 million in kickbacks in exchange for buying from certain vendors, was sentenced to 6½years. Gilbert Fiorentino, 54, who took $600,000, got 5 years.

Last month, Systemax disclosed in a regulatory filing that the company's internal controls and bookkeeping were the subject of an ongoing grand jury probe by the U.S. attorney's office in Miami.

Shares of Systemax, which are down nearly 14 percent in the past year, rose 51 cents Wednesday to close at $10.99.